Chapter Name: Relationship between costs, revenue, and profits
Description:Demonstrates how pricing and cost control affect profit margins.
Purpuse:To support profit maximization and cost management.
Rational:Provides a foundation for sustainable business operations.
Chapters Topics
Elements of competitive pricing
Competitive pricing involves setting prices based on what competitors charge for similar products or services. Businesses may choose to price lower to attract customers or higher to reflect superior quality or features.
Methods for costing
Costing methods include job order costing, process costing, and activity-based costing. These methods help businesses determine the cost of producing a product or service, which informs pricing and profitability analysis.
Analysis of profit mark-up
Profit mark-up refers to the percentage added to the cost of a product to determine its selling price. Analyzing the mark-up helps businesses ensure that pricing covers costs and generates desired profit margins.
Types of profit
Types of profit include gross profit (revenue minus cost of goods sold), operating profit (gross profit minus operating expenses), and net profit (operating profit minus taxes and interest). Understanding these helps businesses assess profitability at different levels.